AirTran awaits Midwest's board: Response to merger presentation anticipated
Jul. 18--AirTran Holdings Inc.'s next step in its attempt to buy Midwest Air Group Inc. is to wait for a response from Midwest Air's board, AirTran Chairman Joe Leonard said Tuesday.
If Midwest Air's board agrees to initiate merger discussions, a definitive agreement could be reached very quickly, Leonard said. He said AirTran would have a limited amount of due diligence to conduct on Midwest Air, which operates Midwest Airlines and Midwest Connect.
"I think we could get this done in three days," Leonard told reporters.
His remarks followed a speech Leonard gave at a meeting of the Downtown Milwaukee Rotary Club. Leonard gave the audience of more than 250 business leaders a condensed version of the presentation he made Monday to Midwest Air's board of directors.
That presentation, a copy of which was filed with the U.S. Securities and Exchange Commission, sets a goal of reaching a merger agreement by Aug. 10. That's the deadline for AirTran's hostile tender offer, worth about $400 million, which so far has drawn pledges for nearly 60% of Midwest Air's stock.
The presentation to that nine-member board, including three directors nominated by AirTran and elected at Midwest Air's annual shareholders meeting, has drawn little public comment from Midwest Air. The board has taken no action in response to the presentation, which Midwest Air's board sought after seeing three incumbent directors ousted by shareholders.
Leonard acknowledged a lack of acrimonious public statements from both companies following Monday's presentation.
Leonard and Midwest Air Chairman Timothy Hoeksema have taken shots at each other's companies since AirTran's takeover bid first surfaced in December.
"We want to move on in a positive light," Leonard told reporters.
Still, Leonard's speech to the Rotarians included a few unflattering comments on Midwest Air's performance.
That came when Leonard talked about AirTran's growth after 1999, when he was named chairman and chief executive officer. Since 2000, he said, AirTran has increased its passenger capacity by 300% and has doubled the size of its Atlanta hub. Meanwhile, Midwest Air has grown its Milwaukee hub by less than 20%, Leonard said.
At the same time, AirTran has eliminated service from its Atlanta hub to two cities, while Midwest Air has dropped service from Milwaukee to nine cities, he said.
"I ask you, who's got the better record of developing markets and sticking to markets?" Leonard said.
But most of Leonard's 30-minute speech focused on how AirTran would grow operations in Milwaukee if it acquired Midwest Air.
Leonard cited the AirTran mantra: Low fares generate big increases in businesses, including more non-stop flights to new destinations. He also discussed AirTran's customer service record, including its No. 2 ranking in the last three annual airline quality ratings conducted by Wichita State University and University of Nebraska-Omaha.
The audience responded with polite applause, followed by a handful of skeptical questions. Among those interrogating Leonard was Randall Hoth, president of the Wisconsin Better Business Bureau. Hoth noted that Midwest Air has provided discounted fares for the non-profit group to fly people to Milwaukee for meetings.
"Our fares are so low you don't need special rates," Leonard replied, drawing a laugh from the audience.
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